Question

how has the international monetary fund/IMF hurt equador with the loan signed in last march

how could equador have prevented themselves from going into a recession?

Answer 1

Answer: Ecuador signed a loan agreement with IMF in March for $4.2 billion for three years.

But this agreement with IMF comes with certain terms and conditions and likely to hurt more than good.As it comprises of conditions like:

1.Strict tightening of country's budget by approx 6%of GDP over 3 years which will hurt country and its people. It'll result into unemployment,higher taxes and reduction in public investment.

2.Other one is changing shape of economy in various ways like Cental bank to be kore autonomous,public debt to be privatised and more liberalisation and more say of employers over employees.

This fiscal fiscal tightening of country will push it nearer to recession.As with constraints in buget unemployment will rise,demand will reduce as a result aggregate supply will also go down and Growth will fall for the country.Ultimately Poverty and disparities will rise all over.

Ecuador could have prevented this recession if it would have taken steps in time like by diversifying it economy from traditional sectors.It is among largest producer of crude oil and petroleum but as a member of OPEC it is binding with certain rules(though it has decided to leave when opec didn't support it on increasing production).

Political reforms and strong political will with certain hard decision could have proved beneficial even at tis point of time as well.

Hope it helps!

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